Essays on the Political Economy of Government Fragmentation Marc Puigmulé-Solà ADVERTIMENT. La consulta d’aquesta tesi queda condicionada a l’acceptació de les següents condicions d'ús: La difusió d’aquesta tesi per mitjà del servei TDX (www.tdx.cat) i a través del Dipòsit Digital de la UB (diposit.ub.edu) ha estat autoritzada pels titulars dels drets de propietat intel·lectual únicament per a usos privats emmarcats en activitats d’investigació i docència. No s’autoritza la seva reproducció amb finalitats de lucre ni la seva difusió i posada a disposició des d’un lloc aliè al servei TDX ni al Dipòsit Digital de la UB. No s’autoritza la presentació del seu contingut en una finestra o marc aliè a TDX o al Dipòsit Digital de la UB (framing). Aquesta reserva de drets afecta tant al resum de presentació de la tesi com als seus continguts. En la utilització o cita de parts de la tesi és obligat indicar el nom de la persona autora. ADVERTENCIA. 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In the using or citation of parts of the thesis it’s obliged to indicate the name of the author. 2020 PhD in Economics Essays on the Political Economy of Government Fragmentation Marc Puigmulé-Solà Marc Puigmulé-Solà s nomic co PhD in E PhD in Economics Thesis title: Essays on the Political Economy of Government Fragmentation PhD student: Marc Puigmulé-Solà Advisors: Albert Solé-Ollé Pilar Sorribas-Navarro Date: June 2020 A la meva mare, el puntal del meu món. iii iv Acknowledgements Doing a PhD is a challenging cocktail of emotions that makes me write these lines with tears in my eyes. There is a mix of the joy and strength from the first year, the anxiety and dejection from the following ones, and the stress of the very last period. Too many feelings that I could not have managed alone. This thesis was completed thanks to each one of you who personally or professionally accompanied me and took care of me in this long journey. I used to say that doing a PhD is the fastest way to hate academia. Fortunately, this feeling passes quickly, and now, I am overwhelmed by a sense of joy and gratitude. Now it is time to thank you all. Warning: this is not going to be short! First and foremost, I am deeply grateful to my advisors Albert Solé-Ollé and Pilar Sorribas-Navarro. Every single feedback was a boost in the quality of my research. Beyond their undoubted capability as researchers and advisors, and given that this is the relaxed part of the thesis, I want to highlight their human side. Albert has a unique sense of humour in his direct way to say things. He wrote to me once “I don’t know what you mean, neither do you!”, I imagined him writing it with a playful smile. Pilar used to say that I was hyper optimistic. Still, quickly she ended up comforting me many times while I was crying like a baby. I cannot be more thankful for all the support and guidance I have received from both of them. I want to express my gratitude to the IEB (Barcelona Institute of Economics) and to the Department of Economics of the University of Barcelona for funding my research and giving me the opportunity to attend so many conferences over these years. Both the IEB and the Department have given me the opportunity to develop my research in a friendly and enjoyable environment. Their incredible value as people even surpasses their high talent as researchers. I want to thank Núria Bosch, José María Durán and Martí Parellada for leading these institutions and Elisabet Viladecans for her enthusiasm as a Director of the PhD program. I also want to thank the CEBI (Center for Economic Behaviour and Inequality of the University of Copenhagen) for giving the opportunity to share their great research environment with me during three months. v Over these years, I have met extraordinary people. I miss a lot those lunchtimes laughing with the IEB members: Dani Montolio, Jordi Jofre, Judit Valls, Dirk Foremy, Javier Vázquez, Zelda Brutti, Marta Curto, Amedeo Piolatto, Gianmarco Daniele, Sergio Galletta and everyone else. Amazing time together saving Catalonia and the world… and how to forget the economics cup, they are truly a “dream team”! I want to mention the three “IEB angels” Susana Cobos, M. Àngels Gómez and Charisse Tubianosa. Their help goes far beyond administration issues, always there with a contagious smile and a “spicy” comment to lift your spirit. I wish to address a special thanks to those who host me and care about me at the beginning. My great office mates Francisco de Lima, Nicolás González and Ilias Passidis, thanks for the affection and support. I can only remember them with great joy in my heart. My gratitude extends to Xavi Massa, Jordi Orrit and Catarina Alvarez. Many thanks also to my last office mates Magdalena Dominguez and Kinga Tchorzewska. They filled the space with smiles and kind words that were medicine in dark times. I also want to thank all the other colleagues who create a network of love that prevents anyone from falling: Juan Torrecillas, Rodrigo Martínez, Pierre Magontier, Alessio Romarri, Filippo Tassinari and the rest of PhD students of the program. I don’t want to forget to mention Pol Campos and Sergi Sansano; we spent a fantastic time during the master program. I would like to specially mention the over efficient UB School of Economics team. They are the lighthouses of all PhD students. Gina, Arnau, Roberto and Joana make one feel at home. Its head manager Jordi Roca deserves a notable mention. He is a pillar of the faculty and the PhD program, but more importantly, he has become a pillar in my life. He is an unconditional friend. We met at the beginning of this path, and our friendship is meant to last forever. The PhD also has gifted me with two unbelievable friends, Mariona Mas and Tania Fernández. This thesis would not be possible without your presence by my side. There are simply not enough words to describe my gratitude and love. I also don’t want to forget my lifelong friends. We saw each other less during this period but every time was like time had not passed. Thanks Àngel, Anna, Ariadna, Eva, Núria,… (the list would be very long). vi I am eternally grateful to my partner in life, Michael. Loving me may not be easy, but doing it during the PhD is true love. Thank you Michael, for accompanying me in the most beautiful moments, but also in the difficult ones, and always holding and supporting me. I know that doing a PhD is not only hard for the student, but also for the people around him. Lastly, thanks to my fantastic family. We are not many, but our love is immeasurable. Above everyone else in the world, my mum. She is the mainstay of my world. I would literally be lost without her. I love you, mum. Cancer took my father away from us at the very beginning of this journey. I have imagined many times his face full of pride, seeing me reach this objective. He would have cried, so do I. This thesis is yours, at least as much as it is mine. vii viii Contents 1 INTRODUCTION ............................................................................................................................. 1 2 GOVERNMENT FRAGMENTATION AND POLITICAL CORRUPTION ................... 8 2.1.- INTRODUCTION ................................................................................................................ 8 2.2.- GOVERNMENT FRAGMENTATION AND ACCOUNTABILITY ...................... 12 2.2.1.- GOVERNMENT FRAGMENTATION REDUCES ACCOUNTABILITY ........................ 12 2.2.2.- GOVERNMENT FRAGMENTATION ENHANCES ACCOUNTABILITY ..................... 14 2.3. INSTITUTIONAL FRAMEWORK ................................................................................. 16 2.3.1.- LOCAL POLITICS ........................................................................................................ 16 2.3.2.- GOVERNMENT FORMATION AND FRAGMENTATION ........................................... 16 2.3.3.- POLITICAL CORRUPTION IN SPAIN ........................................................................ 18 2.4.- EMPIRICAL ANALYSIS ................................................................................................